Skip to main content
Find a Lawyer

Long-Term Incentive Plan - McKesson HBOC Inc.

                              McKESSON HBOC, INC.
                           LONG-TERM INCENTIVE PLAN
                     (As Amended through January 27, 1999)

          1.   Name and Purpose. The name of this plan is the McKesson HBOC,
Inc. Long-Term Incentive Plan (the 'Plan')(formerly known as the McKesson
Corporation Long Term Incentive Plan). Its purpose is to advance and promote the
interests of the stockholders of McKesson HBOC, Inc., a Delaware Corporation
(the 'Company') by attracting and retaining employees who strive for excellence,
and to motivate those employees to set and achieve above-average financial
objectives by providing competitive compensation for those who contribute most
to the operating progress and earning power of the Company, its subsidiaries and

          2.   Administration of the Plan. The Plan shall be administered by a
committee (the 'Committee') consisting of not less than two directors of the
Company to be appointed by the Board, each of whom is an 'outside director'
within the meaning of Section 162(m) of the Internal Revenue code of 1986, as
amended. No member of the Committee shall be eligible to receive benefits under
the Plan. The Committee shall have the sole authority, in its absolute
discretion, to adopt, amend, and rescind such rules and regulations as, in its
opinion, may be advisable in the administration of the Plan, to construe and
interpret the Plan, the rules and regulations, and to make all other
determinations deemed necessary or advisable for the administration of the Plan.
All decisions, determinations and interpretations of the Committee shall be
final and binding on all participants and other interested parties.

          3.   Eligibility. Participation in the Plan shall be limited to those
full-time, salaried key officers and other employees of the Company, its
subsidiaries and affiliates who are selected from time to time by the Committee.
Participants in the Plan are also eligible to participate in any incentive plan
of the Company.

          4.   Calculation of Awards. The Plan is designed to reward
participants with benefits which reflect the financial performance of the
Company over performance periods of a duration designated by the Committee at
the beginning of such period. The Committee may (but is not required to)
designate for each incentive period the measures of financial performance and
the performance objectives (including, but not limited to, earnings per share,
total shareholder return or return on capital employed) applicable to awards
made with respect to such periods. The foregoing notwithstanding, the maximum
amount potentially payable to an individual for a performance period shall not
exceed 125% of the participant's rate of basic compensation at the beginning of
the performance period, multiplied by the number of years in the performance
period. For the purpose of calculating the maximum amount for performance
periods beginning after 1997, the 125% factor shall be increased by adjusting it
by the compound rate of total shareholder return for the Company, as determined
by the Committee, for the period elapsed since the beginning of the last
performance period.
          5.   Payment of Awards. All awards to participants pursuant to the
Plan shall be paid in cash, provided, however, that, at the participant's
election, receipt of all or part of an award may be deferred under the terms of
the Company's Deferred Compensation Administration Plan II in the manner
prescribed by regulations established by the Committee.

          A Participant shall have no right to receive payment of any award
under the Plan unless he or she has satisfied regulations prescribed by the
Committee at the time of making the award and the Committee has determined that
the performance objectives applicable to such award, if any, have been achieved.

          Any other provision of the Plan to the contrary notwithstanding, if
the Committee determines that a Participant has engaged in any of the actions
described in (c) below, the consequences set forth in (a) and (b) below shall

          (a)  Any outstanding award granted on or after October 27, 1993, shall
be forfeited immediately and automatically and shall not be payable to the
participant under any circumstances.

          (b)  If the participant received payment of an award granted on or
after October 27, 1993, within six months prior to the date that the Company
discovered that the participant engaged in any action described in (c) below,
the participant, upon written notice from the Company, shall immediately repay
to the Company in cash the amount of such award (including any amounts withheld
pursuant to Paragraph 7).

          (c)  The consequences described in (a) and (b) shall apply if the
participant, either before or after termination of employment with the Company
or one of its subsidiaries or affiliates:

               (i)    Discloses to others, or takes or uses for his own purpose
or the purpose of others, any trade secrets, confidential information,
knowledge, data or know-how belonging to the Company or any of its subsidiaries
or affiliates and obtained by the participant during the term of his employment,
whether or not they are the participant's work product. Examples of such
confidential information or trade secrets include (but are not limited to)
customer lists, supplier lists, pricing and cost data, computer programs,
delivery routes, advertising plans, wage and salary data, financial information,
research and development plans, processes, equipment, product information and
all other types and categories of information as to which the participant knows
or has reason to know that the Company or its subsidiaries or affiliates intends
or expects secrecy to be maintained;

               (ii)   Fails to promptly return all documents and other tangible
items belonging to the Company or any of its subsidiaries or affiliates in the
participant's possession or control, including all complete or partial copies,
recordings, abstracts, notes or reproductions of any kind made from or about
such documents or iformation contained therein, upon termination of employment,
whether pursuant to retirement or otherwise;

               (iii)  Fails to provide the Company with at least thirty (30)
days' written notice prior to directly or indirectly engaging in, becoming
employed by, or rendering services, advice or assistance to any business in
competition with the Company or any of its subsidiaries or affiliates. As used
herein, 'business in competition' means any person, organization or enterprise
which is engaged in or is about to become engaged in any line of business
engaged in by the Company or any of its subsidiaries or affiliates at the time
of the termination of the participant's employment with the Company or any of
its subsidiaries or affiliates;

               (iv)   Fails to inform any new employer, before accepting
employment, of the terms of this paragraph 5 and of the participant's continuing
obligation to maintain the confidentiality of the trade secrets and other
confidential information belonging to the Company or any of its subsidiaries or
affiliates and obtained by the participant during the term of his employment
with the Company or any of its subsidiaries or affiliates;

               (v)    Induces or attempts to induce, directly or indirectly, any
of the customers of the Company or its subsidiaries or affiliates, employees,
representatives or consultants to terminate, discontinue or cease working with
or for the Company, or any of its subsidiaries or affiliates, or to breach any
contract with the Company or any of its subsidiaries or affiliates, in order to
work with or for, or enter into a contract with, the participant or any third
party; or

               (vi)   Engages in conduct which is not in good faith and which
disrupts, damages, impairs or interferes with the business, reputation or
employees of the Company or any of its subsidiaries or affiliates.

          The Committee shall determine in its sole discretion whether the
participant has engaged in any of the acts set forth in (i) through (vi) above,
and its determination shall be conclusive and binding on all interested persons.

          Any provision of this paragraph 5 which is determined by a court of
competent jurisdiction to be invalid or unenforceable should be construed or
limited in a manner that is valid and enforceable and that comes closest to the
business objectives intended by such invalid or unenforceable provision, without
invalidating or rendering unenforceable the remaining provisions of this
paragraph 5.

          6.   Transferability. Awards made pursuant to the Plan are not
transferable or assignable by the participant other than by will or the laws of
descent and distribution, and payment thereunder during the participant's
lifetime shall be made only to the participant or to the guardian or legal
representative of the participant. Payments which are due to a deceased
participant pursuant to the Plan shall be paid to the person or persons to whom
such right to payment shall have been transferred by will or the laws of descent
and distribution.

          7.   Withholding Taxes. Whenever the payment of an award is made, such
payment shall be net of an amount sufficient to satisfy federal, state and local
withholding tax requirements and authorized deductions.

          8.   Funding. No provision of the Plan, or regulations adopted
hereunder, shall require the Company, for the purpose of satisfying any
obligations under the Plan, to purchase assets or segregate or place any assets
in a trust or other entity to which contributions are made.

          9.   Amendment. The Plan may be amended or revised by the Board of
Directors of the Company.

          10.  Termination. The Plan may be terminated at any time by resolution
of the Board of Directors of the Company by the affirmative vote of a majority
of the directors in office; provided, however, that such termination shall not
affect any incentive award which shall have been granted prior to such


Was this helpful?

Copied to clipboard